The Federal Opposition has accused the Government of what it describes as "an extraordinary and highly improper move" involving mandating the automatic transfer of previously accumulated savings into MySuper default accounts.
The Opposition spokesman on Financial Services, Senator Mathias Cormann, claimed the Government's move, contained in the third tranche of its Stronger Super legislation, risked exposing a million Australians to potentially adverse and costly consequences.
"Billions of dollars of member-chosen assets could automatically be transferred to default funds," he said.
The Opposition spokesman's warning followed on from similar complaints expressed by the Association of Superannuation Funds of Australia (ASFA) about member-selected default options being caught up in automatic, unsanctioned transfers.
Cormann claimed affected super fund members would be exposed to all the transaction costs involved in changing asset allocations from their chosen fund to a mandated MySuper default fund, and could be placed into a lower-returning, higher fee-paying or higher-risk investment option.
He suggested that there were also massive potential implications for the insurance arrangements people had organised within their chosen superannuation fund.
Cormann said there was absolutely no way the Coalition would support the legislation, and that unless the Government removed the relevant provisions from the legislation, the Opposition would be voting against the bill.
The Opposition spokesman said the Coalition was proposing two courses of action for the Government – withdrawal of the bill pending further consultation, or amendments to ensure "a member who has previously exercised choice of fund while also opting for the default investment option of that chosen fund cannot be automatically transferred into a MySuper product".
Cormann's amendment also includes that any product which qualifies as a MySuper product is able to compete freely in the default superannuation fund market.
Cormann also yesterday called on the Minister for Financial Services, Bill Shorten, to immediately release the Productivity Commission report into default funds under modern awards.
